Apple shares are trading lower after the company delivered a strong fiscal first-quarter earnings beat, reporting record revenue and better-than-expected margins while warning that rising memory prices and potential supply constraints could weigh on profitability.
BNN Bloomberg spoke with Mark Newman, managing director and senior analyst covering technology hardware at Bernstein, about the strength of iPhone demand, the impact of higher component costs on margins and why Apple may be better positioned than competitors to navigate supply chain pressures.
Key Takeaways
- Apple delivered record revenue and an earnings beat, supported by strong smartphone demand and resilient margins.
- Rising memory prices and potential supply shortages remain the key risks to profitability in the coming quarters.
- Premium smartphone demand continues to support pricing power despite the risk of future price increases.
- A post-pandemic replacement cycle is driving stronger-than-expected consumer upgrades globally, including China.
- Investors are balancing near-term growth momentum against longer-term margin pressure from higher input costs.
Read the full transcript below:
LINDSAY: Shares of Apple are trading lower today after the company posted mixed first-quarter results. It said it is expecting challenges from memory price hikes and potential shortages. However, it also reported record sales and a forecast that surpassed expectations. Here to give us his perspective is Mark Newman, managing director and senior analyst covering technology hardware at Bernstein. It is good to have you join us. Thanks so much.
MARK: Absolutely. Thanks for having me today.
LINDSAY: The company is warning that rising prices could put pressure on margins. What parts of the supply chain are under the most strain right now?
MARK: Definitely memory. Prices and shortages are the biggest issue facing all smartphone makers. Tim Cook and the CFO highlighted issues with memory prices. Despite that, the company delivered strong revenue and earnings per share, with all-time high revenue, all-time high iPhone revenue and strong gross margins, including the guidance for the quarter. They talked about concerns around memory prices, but right now it is not really impacting them.
LINDSAY: Staying with those concerns around higher prices, do you think this will start impacting Apple soon? When you talk about the iPhone, it is already more expensive than some competitors’ phones. Is there a concern that customers might start going elsewhere?
MARK: I think the issue for Apple, as with all smartphone makers, is that as memory prices go up, they will have to pass those costs on to consumers. Presumably, Apple will do that to try to maintain its gross margins. I would expect you will probably see some price increases for iPhones down the line. Apple will try to minimize that as much as possible. I think Apple will manage this better than competitors. The real question is whether consumers will buy as many phones if prices rise by 10 per cent. We do not know the answer to that yet, and that may be why the share price is a bit weak today. But I remain positive on the stock.
LINDSAY: On the flip side, Apple reported record sales and a better-than-expected forecast. What do you think is driving these results?
MARK: The iPhone 17 has been phenomenal. Revenue was up about 23 per cent year over year, with all-time high revenue and all-time high market share for iPhones. Performance was strong not just in the U.S., but globally, including a significant rebound in China. A big reason is the lapping of COVID cycles. During the lockdowns in 2021, there was a surge in phone purchases, particularly iPhones, and those devices are now four to five years old. That replacement cycle is a major driver of demand. Looking ahead, I think that trend will continue for some time.
LINDSAY: Sales in China were particularly strong. What do you think contributed to that, and was it also driven by the iPhone 17?
MARK: Yes, it was mostly the iPhone 17, along with some older products. In China, there was a subsidy program that Apple benefited from this year, which it did not benefit from last year. That provided a boost. Huawei is also on the back foot right now due to its new operating system, which customers have not fully embraced yet. Apple has benefited from that as well.
LINDSAY: It is hard to talk about any technology company without discussing artificial intelligence. Did Apple say anything in its latest earnings about progress on AI?
MARK: They did talk about Apple Intelligence and the new version of Siri, which is now about two years late. There are high expectations for it. It was confirmed recently that Apple is working with Google’s Gemini models to improve Apple’s own foundation models. Management, including Tim Cook, discussed that collaboration on the call. The goal is to combine Apple’s on-device foundation models with leading Gemini models to deliver a more advanced and personalized Siri and Apple Intelligence experience. They did not specify an exact launch date, but they said it will be this year.
LINDSAY: The iPhone clearly remains the core driver, but Apple also noted weaker demand in areas like Macs and wearables. Is that something investors should be concerned about?
MARK: Not particularly. I think it is mostly related to product launch timing. The iPhone 17 cycle and the COVID replacement cycle are dominating attention right now. Other devices are performing reasonably well, but they look weaker by comparison because iPhone growth was so strong. Services also performed well, with all-time high revenue in that segment.
LINDSAY: That is all the time we have. Mark Newman, managing director and senior analyst covering technology hardware at Bernstein, thanks very much for joining us.
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This BNN Bloomberg summary and transcript of the Jan. 30, 2026 interview with Mark Newman are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
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